Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.

June 27, 2002

"Should You Bank Online?"

Host: Online banking: it's just not a passing fancy anymore. On this week's edition of "The Road To Riches," personal finance expert Jordan Goodman tells us about the main advantages of online banking for customers.

What once was a curiosity has become mainstream -- about 18 million Americans now do some, or all, of their banking online. One third of all Americans homes with Internet access use it for banking. More than half of all banks offer online banking services, and the percentage of customers using it is soaring every year. For the banks, it is a way to differentiate themselves and dramatically cut the costs of serving customers. Increasingly, a bank’s online offerings provide a reason why a customer will choose them over rivals.

These are the main advantages of online banking for customers:
1. You can set up automatic bill paying, so the bills you have to pay that are the same amount reach month -- like the rent, mortgage, car payment, etc. -- can be sent electronically and automatically. All other bills can be paid easily by putting in the payee address and your account number, and you just have to enter the amount and date of payment. No stamps to lick or late postal service delivery.

2. You can track your balances and move money around instantly whenever you want from your computer. Otherwise, you have to wait until you get a bank statement, or go to an ATM, to know what is going on with your account. You can also download data into a personal finance program, like Quicken or Microsoft Money, to analyze and track your budget -- and even prepare your taxes.

3. You can aggregate your accounts, so that you can keep track of all your accounts beyond your bank account -- frequent-flier miles, insurance policies, credit cards, etc. -- through your bank account.
   

4. You can also trade stocks and mutual funds though your online bank account. Many discount brokers, like E*Trade, have gotten into the game of offering bank services as well.

5. There are a large number of Internet-only banks that have no brick and mortar branches. Some names of the bigger ones: Netbank; First Internet Bank of Indiana; and PC Bank. Because their expenses are so much lower, they tend to offer high yields on CDs and money funds, and charge lower rates on loans and credit cards -- and ask for lower minimum balances. One problem with these banks is that they don’t have their own ATMs to get cash or make deposits. Many banks will reimburse you up to $6 for the ATM fees you have to pay each month to get cash. Some are starting to let you make deposits in certain ATM networks.

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